Cameroon: govt could pay Stecy SA up to CFA2bn for deal termination

Business in Cameroon | After the public transport company Stecy SA saw its contract with the Yaoundé Urban Community (CUY) terminated, the company turned to the Prime Minister to request arbitration.

Indeed, according to a report published by the Ministry of Finance (Minfi) on the cost of budgetary risks of PPP projects, “if the termination is validated, the State could be required to pay Stec a compensation of up to CFA2 billion”. This estimate was provided by the Support Council for Partnership Contracts, Carpa.

On August 23, 2016, the State of Cameroon, via the Minister of Transport and the Government Delegate to the Yaoundé Urban Community, and the Portuguese consortium Eximtrans Sarl/Irmaos Mota Construcao signed a partnership contract for the financing, design, construction, operation, and maintenance of an urban mass transit system in Yaoundé. The contract, valued at CFA17 billion, was scheduled to last 15 years from its entry into force on December 27, 2016. The partners were to rely on the transport company Stecy SA to implement the project.

However, before this deadline is reached, the Mayor of Yaoundé, Luc-Messi Atangana, announced the deal’s termination. This decision was taken following “various breaches by Stecy of its contractual obligations,” the Minfi report indicated, without specifying the breaches. But, as a reminder, in May 2021 the Minister of Transport, Jean Ernest Masséna Ngallè Bibéhè accused Stecy of leasing its logistics base to a clandestine intercity transport operator. The alleged illegal operator- Tourismo Express- was effectively connecting the city of Douala, from the logistics base of Stecy in Yaoundé. Moreover, on July 23 of the same year, Stecy’s MD Celestin Hermann Tsambou was summoned by the national labor inspector because of a complaint from employees for “unfair dismissal”.

As a result, the mayor of Yaoundé launched an international tender in December 2022 to select a new operator to replace Stecy. This is another significant setback for the urban transport project in the Cameroonian capital, which has been struggling to take off for nearly 20 years. Before Stecy, urban transport in Yaoundé was provided by Le Bus, a consortium formed in 2005 between Cameroonian public institutions and the American group Parker International Industries, which had closed down in 2016.

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